Most firms lag behind net-zero targets, NTT survey reveals

A recent survey by NTT has disclosed that a significant majority of global enterprises are falling behind their net-zero carbon emission targets, with discrepancies evident between self-reports and deeper analysis.

The survey of 500 companies reveals that while 68% of enterprises admit they are behind schedule, further scrutinisation suggests that as many as 95% might be lagging.

The findings were part of the "Exploring the Paths to Net Zero" study, conducted in collaboration with ThoughtLab Group. The study aimed to assess the current landscape of corporate sustainability initiatives worldwide.

"While the results of this survey clearly indicate that large companies have more work to do to improve their sustainability practices, it is also cause for optimism," said Vito Mabrucco, Global Chief Marketing Officer at NTT. "By learning about the processes, innovations and technological implementations of firms that are achieving or exceeding their net-zero goals, companies may improve their own plans to cut emissions while simultaneously developing a collaborative spirit of global corporate sustainability for the betterment of all."

Among the key points, companies that are trailing behind, termed "followers," attribute their shortfalls to several issues, including escalating data usage, the increasing resource demands of AI, balancing net-zero objectives with business goals, and unforeseen disruptions such as geopolitical events. Currently, the average company has managed to decrease greenhouse gas emissions by 4.2% annually, but this rate needs to increase to 11.1% to meet target-year goals.

The study underscores several internal and external challenges impeding progress. Internally, 65% of companies indicated difficulty in balancing sustainability initiatives with business objectives and shareholder expectations. Moreover, issues such as limited access to internal emissions data and a lack of actionable net-zero roadmaps hinder progress.

Externally, the evolving landscape of governmental regulations and the digital divide are creating additional barriers. About half of the respondents highlighted the unpredictability of these factors as a significant obstacle. Furthermore, companies tend to overlook potential shocks like economic downturns and supply chain disruptions, with 33% of executives stating that many of their initial assumptions have become invalid.

On the other hand, 9% of enterprises, identified as "leaders," are either on schedule or ahead of their net-zero targets. These companies leverage advanced technologies such as AI, IoT, and photonics-based infrastructure to achieve their goals.

AI stands out as a critical tool for these leaders. According to the survey, 39% of "leaders" use AI for net-zero decision support and planning, compared to 28% of other firms. While 48% of the surveyed companies do not use AI at all, those who do gain deeper insights from internal and external data, facilitating more effective energy optimisation and emissions control.

Photonics-based infrastructure is also emerging as a vital component for achieving net-zero goals. Leaders see significant value in this technology, with 25% already leveraging photonic networks compared to 11% of followers. For instance, a Japanese manufacturing CEO reported that employing photonics technology resulted in energy savings of around 30%.

Management and structural approaches further distinguish leaders from followers. Leaders are more likely to establish comprehensive business plans and budgets dedicated to decarbonisation, with 55% of them implementing clear policies and governance frameworks, as opposed to 41% of followers. Additionally, they are more apt to appoint executives and dedicated teams to oversee these initiatives.

The investment disparity is notable; leaders spent an average of $81.4 million in 2023 to meet net-zero goals, compared to $60.7 million by followers. However, leaders are more successful in offsetting these costs with the benefits reaped from their emissions reduction programmes, the researchers state.